Organizations fight to get rid of dance tax

SEATTLE - Dance organizations in Seattle are fighting to get rid of a state dance tax.

Organizations claim the state just decided to reinterpret a law, but the state claims they’ve been enforcing it for decades.

The cover charge the State Department of Revenue is after has sparked a firestorm from Seattle businesses.

KIRO 7 Eyewitness News reporter John Knicely spoke with Hallie Kuperman, who opened Century Ballroom 16 years ago and thought she was paying the right taxes.

“This is what we’re paying. This is what we're doing. We teach dance classes, we rent out our space. Are we doing the correct thing? And they [the Department of Revenue] said, ‘Yes,’” said Kuperman.

In a 2011 audit, the state determined Kuperman should be charging sales tax on cover charges for open dancing. Now, after more than a year of appeals, she owes $92,000 in back taxes due in a couple months.

The state points to the law that says taxes apply to a cover charge that entitles guests the opportunity to dance.

Kuperman told the Department of Revenue agents the phrase is too vague.

“I looked at them and said, ‘How would you define the opportunity to dance?’ And they could not define it,” said Kuperman.

Large-scale events, such as the Capitol Hill Block Party during the summer, are exempt from the dance tax as are large-scale concert venues.

According to the Department of Revenue, if a venue provides a dance floor and there is reasonable expectation people might dance, sales tax applies to cover charges.

Of the 13 Seattle businesses with dancing audited in 2011, only 8 of the 13 were paying the tax.

Kuperman said she and others were blindsided and can’t afford the back taxes. She said Century Ballroom is holding a fundraiser next Saturday, and she and other businesses are pushing for a new law that would say the opportunity to dance does not apply to cover charges.

The dance organizations are pushing for a new law that clarifies the dance tax language. They hope to get a hearing in Olympia sometime soon.